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UK energy auction boosts coal and nuclear power generation £1bn subsidy in energy capacity auction will boost coal and nuclear power
(about 4 hours later)
Consumers will need to stump an extra £1bn a year in 2018 to encourage power stations to stay open and keep the lights on, the government confirmed on Friday.Consumers will need to stump an extra £1bn a year in 2018 to encourage power stations to stay open and keep the lights on, the government confirmed on Friday.
A “capacity market” auction undertaken this week by National Grid has ended with a price of £19.40 per kilowatt (kW) being agreed as a subsidy.A “capacity market” auction undertaken this week by National Grid has ended with a price of £19.40 per kilowatt (kW) being agreed as a subsidy.
EDF, the owner of the UK’s existing nuclear fleet, is one of the major provisional winners but other “big six” firms such as E.ON, npower and SSE have also succeeded.EDF, the owner of the UK’s existing nuclear fleet, is one of the major provisional winners but other “big six” firms such as E.ON, npower and SSE have also succeeded.
The government wanted 48.6GW of power to be guaranteed to be available during 2018. It expected to encourage new gas-fired power stations to be built under new 15 year contracts. The government wanted 48.6GW of power to be guaranteed to be available during 2018. It expected to encourage new gas-fired power stations to be built under new 15-year contracts.
In fact 68% of the capacity is to be provided by existing power stations and only 5% by new build.In fact 68% of the capacity is to be provided by existing power stations and only 5% by new build.
More controversially nearly 19% of the power will come from either coal or biomass. The decision to allow coal plants to bid into the auction has been highly controversial because it potentially extends the life of heavy carbon-producing generation which is bad for global warming. More controversially nearly 19% of the power will come from either coal or biomass. The decision to allow coal plants to bid in the auction has been highly controversial because it potentially extends the life of heavy carbon-producing generation which is bad for global warming.
But EDF’s nuclear fleet is also providing 16% of the capacity. This will also be a bonus for Centrica which owns 20% of this EDF-operated business. Centrica has also had two gas stations included. 45% comes from gas fired plants and less than half a percent by those promising demand side reduction.But EDF’s nuclear fleet is also providing 16% of the capacity. This will also be a bonus for Centrica which owns 20% of this EDF-operated business. Centrica has also had two gas stations included. 45% comes from gas fired plants and less than half a percent by those promising demand side reduction.
Energy secretary Ed Davey said the auction had been a great success and would act as a guarantee to keep the lights on. He estimated it would add £11 to the average household energy bill in 2018/19.Energy secretary Ed Davey said the auction had been a great success and would act as a guarantee to keep the lights on. He estimated it would add £11 to the average household energy bill in 2018/19.
“This is fantastic news for bill-payers and businesses. We are guaranteeing security at the lowest cost for consumers. We’ve done this by ensuring that we get the best out of our existing power stations and unlocking new investment in flexible plant, “ he added. “This is fantastic news for bill-payers and businesses. We are guaranteeing security at the lowest cost for consumers. We’ve done this by ensuring that we get the best out of our existing power stations and unlocking new investment in flexible plant,” he said.
Many of the contracts have been awarded for only one year.Many of the contracts have been awarded for only one year.
These are provisional results of the auction. All capacity agreements are subject to final confirmation from the Department of Energy and Climate Change, which is expected no later than 5 January 2015.These are provisional results of the auction. All capacity agreements are subject to final confirmation from the Department of Energy and Climate Change, which is expected no later than 5 January 2015.
The final price below £20 per kW is way down from the £75 kW price where the auction started on Tuesday. The price is gradually reduced in a series of bidding sessions leaving only those able to offer low cost generation. Nuclear is well-known to have very low operating costs. The final price below £20 per kW is way down from the £75 kW price where the auction started on Tuesday. The price is gradually reduced in a series of bidding sessions leaving only those able to offer low cost generation. Nuclear is well known to have very low operating costs.